AI may cut PLI of mid, lower-level employees too

MUMBAI: After cutting productivity-linked incentives (PLI) of more than 7,000 officers, Air India (AI) is now planning to cut such incentives of the remaining 23,000 mid- and lower-level unionised employees, as higher costs and unviable routes take a toll on the national carrier. According to people familiar with the development, AI has had informal negotiations with the unions.

Implementing such a decision could pose a challenge for the AI board and management, as these 23,000 employees are affiliated to different unions and there may be widespread protests across the country. An email query sent to AI didn't elicit any response. Unions have already warned AI not to cut PLI of its mid-level employees.

"We have made presentations to the management and told them not to cut salaries across the board. There are scores of mid-level employees making a mere Rs 3000 PLI per month only," said a union official. PLI forms a large portion of employees' salaries.

AI has a cost structure in which salaries and wages constituting 35% of the total operating costs. AI is targeting a reduction in employee cost of around Rs 500-800 crore. Its current annual employee cost is nearly Rs 3,000 crore.

Meanwhile, AI on Sunday decided to set up a committee to look into PLI issues. A senior AI official said that AI has to take many more steps to control costs to turnaround the company and remain competitive in the market. As is well known, AI has approached the government for a financial bailout.

AI has accumulated losses of Rs 7,200 crore till March 2009. It has a working capital overdraft of Rs 15,000 crore, while its fuel and manpower costs are around 60% of its total cost against 45% in case of private airlines. Last week, AI cut PIL and flying allowance by 25% for those getting PLI of Rs 10,000 or less, while the reduction was 50% for those receiving PLI or flying-related allowances of Rs 2 lakh or more per month.

The latter category includes top management and executive pilots and impacted 7,000 senior management officials, including executives and nonunionised officers and pilots.